DA Davidson has revised its price target for Custom Truck One Source (NYSE: CTOS), a provider of specialized truck and heavy equipment solutions, from $10.00 to $9.00 while maintaining a Buy rating on the stock. The adjustment follows the company’s second-quarter 2024 earnings release.
Custom Truck One Source reported an EBITDA of $80.1 million, which fell slightly below DA Davidson's estimate of $81.4 million and was also not in line with the consensus estimate of $86.8 million.
The analyst noted that the results included an extreme outlier that affected the consensus figure. The company's utilization rate came in at 71.7%, which did not meet the analyst's expectations.
The firm's Transmission business is reportedly continuing to face challenges due to project delays and supply-chain issues. Despite these setbacks, the analyst believes that the delayed projects will eventually be completed. The report also highlighted that most of the company's other key businesses are performing well.
Custom Truck recently presented its Q2 2024 financial performance, reporting sequential revenue growth and adjusted EBITDA growth despite challenges such as supply chain disruptions and high interest rates. It revised its full-year guidance downward due to these market challenges, including a decline in rental fleet utilization and lowered revenue guidance for ERS, TES, and APS by $70 million, $65 million, and $15 million, respectively.
InvestingPro Insights
Recent data from InvestingPro shows that Custom Truck One Source (NYSE:CTOS) is navigating through a challenging period with a significant debt burden and a stock that has taken a substantial hit, declining by 18.92% over the last week and 38.15% over the last six months. Despite the recent downturn, management has demonstrated confidence in the company's future by aggressively buying back shares. This could be a signal of underlying value that management believes is not currently reflected in the stock price.
InvestingPro Data highlights a market capitalization of $961.38 million, indicating the size of the company in the market. The P/E Ratio stands at a negative -72.92, reflecting the company's current lack of profitability. However, analysts predict that the company will be profitable this year, which could potentially lead to a more favorable P/E ratio in the future. Additionally, the company has a Price/Book ratio of 1.12 for the last twelve months as of Q2 2024, suggesting that the stock might be reasonably valued in terms of its assets.
For readers looking to delve deeper into Custom Truck One Source's financial health and future prospects, InvestingPro offers additional insights and metrics, with a total of 8 InvestingPro Tips available. These tips provide a more comprehensive analysis that could be invaluable for making informed investment decisions. To explore these further, one can find additional tips on the company's page at InvestingPro.
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